F&P Healthcare humidification products will drive earnings, Morningstar says

Tuesday 1st December 2009

Fisher & Paykel Healthcare Corp.’s respiratory humidification business, which lagged behind sleep apnea sales in the first half, will probably drive earnings growth through the remainder of the year as the company rolls out new products.

Obstructive sleep apnea, or OSA products were the company’s “star performer” in the first half, achieving 20% growth in constant currency terms, said Morningstar analyst Nachi Moghe, who rates the stock ‘accumulate.’

“We think the company will continue to achieve strong growth in the region of between 18 – 20% in the second half,” he said in a Nov. 24 report. “FPH has a strong product pipeline which we think will enable it to gain market share.”

F&P Healthcare garners equal amounts of revenue from OSA products and its respiratory and acute care (RH) products. The latter’s performance is expected to grow “incrementally” and remain in the double digits throughout the second half, eventually becoming the main contributor, Moghe said.

The company plans to expand its current range of masks and launch new flow generators, while declines in prices of OSA products “seem to have stabilized” he said.

“We think FPH is firing on all cylinders”

Shares of F&P Healthcare rose 0.9% to $3.20 on the NZX today and have climbed about 4% in the past month, while the NZX 50 fell 2%.

The company gets almost 80% of its revenue in U.S. dollars and has enjoyed growth in North America amid growing awareness of the link between sleep apnea and health conditions including heart disease.

Net profit after tax grew 31% to $37 million in the first half, boosted by a weaker New Zealand dollar and solid underlying growth. Gross margin dropped 140 basis points due to an adverse sales mix.

Businesswire.co.nz

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